Mumbai (Commoditiescontrol) – Indian mustard futures traded with negative bias during previous week session with surplus veg oil imports, huge mustard crop harvest and prevailing bearishness across overall global and domestic oilseed front keeping mustard prices on downside note. With only three active day of trade, mustard seed Benchmark contract May’19 futures finally closed at INR 3748 per quintal, down by 1.4% on weekly basis. Open Interest in May’19 futures increased sharply from 74410 lots observed last week to 80190 lots.
Average daily arrivals in country was observed closer to 3.5 lakh bags vs. 5.00 lakh bags observed during last week. Amongst the biggest mustard producing state- Rajasthan accounted for 2.0 lakh bags, MP accounting for 30 thousand bags, UP at 40 thousand bags, Haryana and Punjab at 30 thousand bags, Gujarat at 20 thousand bags, while other states contributing for 30 thousand bags. Moving forward, arrivals pace is likely to remain down as the peak season is getting over soon which shall support the falling market sentiments.
After long wait, government agency NAFED has finally started procuring mustard seed on MSP from major cultivating states. During last week, In MP NAFED procured 259.28 MT, Rajasthan- 5729.5 MT and at Haryana 2958 MT of mustard was procured. Meanwhile, Mr. Sanjeev Chaddha, the managed director of NAFED recently declared that co-operative NAFED is planning to buy 20 lakh tons of mustard seed in the ongoing harvest season at minimum support prices on behalf of the government. Once the NAFED will be fully active in procurement, one might observe famers hoarding the stocks to sell to NAFED for better price realization.
As per latest SEA import data, import of vegetable oils during March 2019 sharply increased by 26% to 1,446,557 tons compared to 1,146,051 tons in March 2018, consisting 1,393,255 tons of edible oils and 53,302 tons of non-edible oils. The overall import of vegetable oils during November 2018 to March 2019 is reported at 6,309,406 tons compared to 5,931,829 tons during previous year i.e. up by 6%.
Due to existing duty differentials between refined and crude palm oil, India is flooded with RBD Palmolein from Malaysia. This also has seriously impacted the prices of mustard seed and being currently quoted Rs. 500-600 per quintal below of MSP of Rs. 4,200 per quintal. Needless to mention Mustard harvest is nearly completed and arrivals in mandies are at peak level. As per SEA officials, “If this aberration is not rectified, the farmer will be greatly affected and discouraged, while domestic Palm Refineries would be destroyed and “Make in India” would remain a pipe dream. There is urgent need to create duty difference of 10% between CPO and RBD Palmolein as was prevailing before 1st January, 2019 to survive in this situation”.
At global front, The United States Department of Agriculture’s Foreign Agricultural Service is reporting an 18 percent decline in EU rapeseed acreage compared to last year. Due to dry sowing conditions in some major rapeseed producing countries, rapeseed acreage declined sharply, especially in France and Germany. Production is forecast to decline eight percent to 18.43 million tons. Last year’s output was 10 percent below the previous year, so that would make two disappointing crops in a row. Carryout in 2019-20 is forecast to fall to 896,000 tons, a 39 percent decline from the current crop year estimate. That would be the second lowest level since 2003.
In short term basis, with rise in veg oil supply due to hefty imports and bumper mustard production along with prevailing weakness in overall veg oilseed complex, mustard prices are likely to stay low in coming weeks.
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